Hundreds of Thousands of Tipped Service Workers Excluded from New York State’s Minimum Wage Increases

As The New Year Brings Higher Wages for Minimum Wage Workers Throughout the State, Wage Increase Negotiated by NY Governor Hochul and the State Legislature Excludes Hundreds of Thousands of Tipped Service Workers Who Earn a SubMinimum Wage. Fair Wage Advocates, Legislators, and Workers Call on Governor Hochul to Prioritize An End to the Subminimum Wage in Next Week’s State of the State Address.

Advocates Warn That With a Significant Influx of Migrants and Asylum-Seekers, the Risk of the Service Sector, Largest Employer of Immigrants, Exploiting These Individuals in Subminimum Wage Jobs Is Alarmingly High.

New York, NY — While many New Yorkers welcomed the new year with a historic minimum wage increase, a significant portion of the state’s workforce, namely hundreds of thousands of tipped service workers, have been excluded. Effective January 1, New York’s minimum wage rose to $16 per hour in New York City, Long Island, and Westchester County, and $15 per hour throughout the state. The change, part of a multi-year plan initiated by Governor Hochul and the New York State Legislature, was forged in an effort to  help New Yorkers keep up with rising living costs. However, by excluding hundreds of thousands of tipped service workers throughout the empire state, the law keeps the subminimum wage system intact, perpetuating economic, racial, and gender disparities and heightened vulnerability for the largest workforce of immigrants in the state.

Especially given the mass exodus of 1.2 million workers from the restaurant industry post-pandemic, raising wages for service workers is critical to both allow workers to meet the rising cost of living and employers to find talented workers during the industry’s worst staffing crisis. As a result of this staffing crisis, many other jurisdictions, like Washington, DC and Chicago, have ended the subminimum wage for tipped workers, and 13 states are moving legislation to follow suit – with New York at risk of being left behind.

Saru Jayaraman, President of One Fair Wage and Director of the Food Labor Research Center at UC Berkeley, points out a critical flaw in New York’s current wage increase. “While some workers will experience wage increases this new year, hundreds of thousands of tipped workers in New York, predominantly women and people of color, are being purposely left behind.” says Jayaraman. “The law does nothing to change an archaic, two-tiered compensation system and does nothing to address the economic insecurity and higher rates of harassment faced by NY’s service workers.”

This issue becomes more pressing given the fact that many other jurisdictions are getting ahead of New York in ending the subminimum wage for tipped workers, and also given New York’s current migrant crisis. With a significant influx of migrants and asylum-seekers, the risk of exploiting these individuals in jobs with sub-minimum wages is alarmingly high.

Jayaraman continues, “With the legislative session beginning and the cost of living topping every 2024 voter poll, we urge Governor Hochul to prioritize tipped workers in preparing for her State of the State address and insist that New York’s elected leaders address the inequities faced by tipped workers. Especially since the restaurant industry is being positioned as the largest employer of new immigrant arrivals, ending the sub-minimum wage is not just a matter of fairness; it’s a critical step in preventing the exploitation of our most vulnerable populations, including the recent migrants.”

While we recognize the progress made for minimum wage workers, we must also confront the harsh reality that tipped workers are being unjustly left behind. One Fair Wage’s latest report,  The Last Major Metropolis reveals the severe impact of the sub-minimum wage system, including wage theft, racial discrimination, and exacerbated hardships due to the pandemic.

As cited, almost half of all tipped workers nationwide reported that their tips went down, and harassment levels went up during the pandemic. However, New York stands out as the state that lost the most workers. Even post-pandemic, New York’s staffing crisis continues to be nearly double that of California with over 120,000 workers, constituting 18 percent, not returning to the industry by the end of 2021. This exodus was attributed to factors such as decreased tips and heightened harassment.

In light of these concerns, One Fair Wage, with the support of fair wage advocates, legislators, and workers, calls on Governor Hochul to address this critical issue in her upcoming State of the State address. Ending the sub-minimum wage for tipped workers is not just a matter of fairness; it is an essential step towards protecting vulnerable populations and promoting economic justice across the state.